Energy industry veterans are familiar with the way turbulent markets create headaches and opportunities in equal measure. Nevertheless 2022 stands out as a year of exceptional volatility, triggered by the invasion of Ukraine which forced many European countries to reconsider their willingness to depend heavily on imported energy.
Cosy assumptions about the reliability of supplies of Russian oil and gas were swiftly overturned as gas prices soared. Growing fears about energy security spread from Europe to parts of Asia while governments raced to protect domestic and industrial consumers from crippling rises in bills and tried to reduce the risk of power outages.
Fortunately a relatively mild start to this winter has constrained energy demand and the most pessimistic expectations about supply shortages have not materialised. However the failure of many countries to invest sufficiently in electricity and gas storage capacity means that uncertainty will continue into next winter.
All this turmoil has produced a short term profit bonanza for the fossil fuel industry. Looking ahead, though, the threat of irreversible climate change remains acute. Affordability and security may currently top the agenda for most Ministers but the need to accelerate greenhouse gas emission reductions has not gone away and continues to be extremely urgent.
In the last few months it has become clear that nuclear energy ticks the three boxes on which policy makers are focused. Firstly it remains the only reliable large scale source of continuous dispatchable zero carbon electricity. Nations with a nuclear energy capability - whether existing, under construction or merely planned - have a more credible pathway to net zero than those without.
Secondly the operating costs of nuclear plants are low compared with the high initial capital build cost. This means that price spikes of the kind suffered by gas consumers in 2022 will not occur in the nuclear industry. Energy price stability looks more attractive, though more elusive, today than for many years and investment in nuclear is needed to deliver it.
Thirdly the ready availability of plentiful nuclear fuel from a geographically and politically diverse range of suppliers makes nuclear one of the most secure of all electricity generation technologies.
Not surprisingly therefore the mood in the nuclear industry today is more optimistic than at any time since the start of the century. The list of countries revising their energy strategy to include expansion of an existing nuclear fleet, reversal of previous decisions to abandon nuclear power, or the development of a new nuclear capability, is growing steadily.
Significantly Germany and Japan, who both turned their backs on nuclear after the Fukushima accident (which was an industrial rather than a nuclear accident), now recognise that their decisions led directly to a toxic cocktail of higher prices, weaker security and worse pollution.
Other countries whose attitude to nuclear has changed recently include South Korea, Sweden, Poland, France and Belgium. Extending the life of existing reactors, a policy which has been identified by the International Energy Agency as the cheapest and fastest way to cut greenhouse gas emissions, is becoming a popular option.
Kazakhstan, where NNWI has recently established a presence and where a nuclear reactor began operating half a century ago, is considering building a new plant. This is logical for a country which is the world’s leading uranium producer and which needs to expand electricity production while simultaneously diversifying away from fossil fuels.
Soon the deployment of advanced modular reactors will bring the benefits of nuclear energy to smaller and more remote communities than those served by larger plants with a capacity of 1GW or more. The potential worldwide market for these SMRs is big enough for more than one of the designs currently under development to succeed.
The improved prospects for nuclear energy at last make the World Nuclear Association’s ambitious Harmony goal of 1000GW new nuclear capacity by 2050 look more realistic. Nevertheless changes are needed if nuclear is to fulfil its huge potential as a crucial element in the global response to climate change.
Firstly political obstacles preventing closer and more effective cooperation between regulators must be removed. It is absurd that a technology which has been approved as safe by a rigorous national regulator must undergo the same level of scrutiny as a completely untested new design before it can be deployed in a new jurisdiction. The delay this causes to its rollout in new markets raises costs and harms the interests of consumers instead of protecting them.
Secondly a more mature approach to using technologies which have been developed in different countries from where they will operate is needed. Fears that a vendor who has provided a generous finance package to a customer in order to get a new reactor built will then attempt to interfere with its future operations are irrational and exaggerated.
Thirdly policy makers must recognise that the cost of maintaining both sufficient back up electricity generation capacity and high levels of energy storage places a limit on the extent to which any modern economy, whose domestic and business consumers require an uninterrupted supply of electricity, can depend on intermittent sources of power.
NNWI unreservedly welcomes the growth of wind and solar energy, both of which are essential if humanity is to overcome the climate change threat. We look forward to seeing renewables provide a growing proportion of the world’s energy needs. But for the foreseeable future nuclear is also needed to complement wind and solar so that the security of energy supply is maintained.
At NNWI we are excited about the opportunities for nuclear energy in 2023. We look forward to working with our partners and other stakeholders in an increasing number of markets around the world. Good luck to you all.